Product Pricing Strategies
Modified on 2009/10/07 09:08 by tmkern — Categorized as: Uncategorized
See Also:
Product Costs vs Period Costs
Segmenting Customers for Profit
How you price your products and services can have an impact on your profits.
The following are descriptions of standard pricing strategies.
Cost-plus pricing
Pricing products and services by applying a certain standard
markup percentage
on top of the total cost of producing the product or service.
MSRP (Manufacturer’s suggested retail price)
Retailers price products based on a suggested price from the product’s manufacturer, which is above the wholesale price paid by the retailer.
Low price, high volume
Reducing prices to sell more product. The idea is to compete on price and increase profits through selling a larger volume of products, though margins will be less.
Premium pricing
Increasing prices for products and services based on an improvement in product quality, and/or additional features and services provided. The idea is to increase profits through selling products and services at higher margins, even though volumes may be less.